The International Energy Agency’s latest World Energy Investment report says India’s energy spending could hit a record US$170 billion in 2026. The big drivers are renewables, oil refining, grid upgrades, and energy storage.
India’s energy investments have been growing about 11% a year over the past five years. Strong policy support, more private players, and rising global confidence in India’s energy transition plans have all helped.
Solar photovoltaic and oil refining are leading the surge. Solar PV investments have been growing 25% a year, and oil refining is up 23% annually. Together, they make up nearly a quarter of the overall increase in energy spending. The jump in solar reflects India’s push for clean power, while refinery expansion is meeting higher fuel demand.
India plans to add almost 15% more refining capacity by 2030, even though it still relies heavily on imported crude. Upstream oil and gas exploration, meanwhile, has slipped about 7% a year since 2020. To turn that around, the government has introduced new licensing rules to attract fresh investment in exploration.
Even as renewables expand fast, coal remains central. India is now the world’s second-largest investor in coal supply, and coal investments have tripled in the last decade. They’re expected to reach nearly US$13 billion in 2026, as the country aims to lift domestic coal output from around 1 billion tonnes to 1.5 billion tonnes by 2030.
The power sector accounts for almost half of all energy investments. In 2025, India met its NDC target of getting 50% of installed power capacity from non-fossil sources, five years ahead of time. Solar led the way, with investments close to US$20 billion. At the same time, spending on new coal-fired plants has fallen sharply and is now only about 40% of the 2010 peak.
Overall, India is now putting almost three times more money into renewables and nuclear than into fossil fuel-based power generation.
As solar and wind make up more than half of installed capacity, the grid needs to keep up. Investments in transmission and distribution are forecast at US$26 billion in 2026, growing 15% a year over the last five years. The government’s Green Energy Corridor programme is helping with this — the first phase has already added more than 3,000 km of transmission lines, and more phases are underway with public and private support.
Hydropower and nuclear are also picking up. Investment in both has tripled since 2020. India wants 100 GW of nuclear capacity by 2047, up from 9 GW today. To encourage it, 2025 reforms now allow private participation in nuclear projects with up to 49% foreign ownership.
Energy storage is becoming a major focus, too. In 2025, storage system tenders crossed 100 GWh—more than double the previous year and over ten times the 2023 level. Alongside batteries, the government is pushing pumped storage, targeting 100 GW by 2035–36.
End-use efficiency is another bright spot, with investments rising steadily to US$18 billion across industries, buildings, and appliances. Electric vehicle spending is growing as well, though it’s still modest at around US$2 billion. EVs now make up nearly 5% of vehicle sales.
The outlook is positive, but challenges remain. Project delays, infrastructure bottlenecks, and under-subscribed tenders are slowing deployment in places. Managing the ups and downs of renewable output through storage and a stronger grid will be key to sustaining growth. In short, the IEA says India’s projected US$170 billion energy investment in 2026 reflects a broader strategy: balancing economic growth with sustainability while strengthening its role in the global energy transition.
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